Hoops a many

KEY POINTS

• Option shares are acquired for their market value on exercise.
• HMRC’s muddled guidance post-Mansworth.
• Situation corrected six years later.
• Should taxpayers be entitled to rely on the incorrect guidance?
• Problems in arguing legitimate expectation.

Many advisers are dealing with enquiries into capital losses arising on the sale of shares acquired via an unapproved share option scheme where the loss was computed in line with HMRC guidance issued in 2003 on the implications of the decision in Mansworth v Jelley [2003] STC 53.

HMRC changed their view in May 2009 and invited affected taxpayers to revise any “open” tax returns. Taxpayers who chose not to revise their returns or who submitted returns after May 2009 using losses that arose under the previous view of the law have been subject to...